Wind energy’s viability trumpeted in volatile market 

Pennsylvania’s 700 commercial wind turbines loom large along ridges, but their number and size belie their contribution to electricity generation.

Despite government subsidies, technological advancements that improved the turbines’ efficiency, and environmental advantages over burning fossil fuels, wind energy provided just 1.5 percent of the state’s electricity last year and less than 4 percent of the nation’s.

“In Pennsylvania it’s pretty anemic,” said Gregory Reed, a University of Pittsburgh professor who directs the Electric Power Initiative and is associate director of the school’s Center for Energy.

State law requires 18 percent of electricity must come from alternative fuel sources and renewables such as wind, solar and hydropower by 2021.

The 1,300-megawatt capacity of the state’s 25 wind farms can provide enough power for a little more than 300,000 homes. PPL Electric Utilities in Allentown, which serves about 1.4 million customers in 29 counties, could exceed that capacity with the single nuclear plant it proposes to build in Luzerne County.

Industry leaders and some observers expect continued growth in wind power, even though a federal subsidy that spurred construction expired on Jan. 1.

Even so, wind farm operators could get a federal tax credit of $23 for every megawatt-hour of electricity they generated in the first 10 years of operation. All projects under construction before the program expired could qualify.

Producers are closing coal-fired power plants, and fuel prices are volatile, contributing to the shocking electricity bills that prompted a state investigation last month.

“What we would say to the (Public Utility) commissioners is this is why you need more wind energy. It doesn’t cost us any more during volatile periods,” said Jim Spencer, founder and CEO of Strip District-based EverPower, which produces about a quarter of the state’s wind power. “We’re unaffected by these spikes.”

Spencer holds out hope for 20 percent or more of electricity coming from renewable sources. The Energy Information Administration predicts that number will be about 16 percent by 2040.

Experts say Pennsylvania’s share will remain in the single digits while builders focus on Western states and attention here remains fixed on abundant shale gas.

REALISTIC POTENTIAL

In South Dakota and Iowa, wind accounts for more than 25 percent of electricity produced, according to Elizabeth Salerno, vice president for data and analysis at the American Wind Energy Association. Most generating plants being built are powered by natural gas or wind, she said.

“Those are 30- to 40-year assets. That sets the tone when looking at what type of source we’re going to use going forward,” she said.

Salerno said Pennsylvania could reach a point where it generates more than 4 percent of its electricity from wind.

“If you’re very careful in how you operate the system, it is realistic,” said Marija Ilic, a professor of electrical and computer engineering at Carnegie Mellon University who studies renewables and the power grid. “The computers scheduling power, that needs to be improved. And you have to integrate this without too much cost.”

Wind energy producers say they have found success on Pennsylvania’s ridges, where turbines can reach consistent winds. Operators include international powers such as BP – which in 2012 opened the state’s largest farm at Mehoopany in Wyoming County – and Florida-based NextEra, the country’s largest wind and solar energy producer that runs farms in Somerset and Fayette counties.

“We’ve always liked the state because of the balance of a decent wind resource, reasonable permitting environment and proximity to the grid,” said Spencer, whose company operates six wind farms in Pennsylvania, New York and California, and will open five outside this state in the next two years. EverPower reported $42 million in revenue in 2012.

He predicts construction of more wind farms in Pennsylvania.

PJM, the Valley Forge-based operator of the regional electricity grid, reports five wind projects “under study” in the state with expected operation dates between the end of this year and 2017. Four of those would have capacity of 200 megawatts or less.

“The future leans toward smaller-size-scale generation,” said Patrick Henderson, Gov. Tom Corbett’s energy executive.

PRICING CONSISTENCY

As the state requires power companies to include renewables in their menus, Henderson expects them to consider more wind.

Operators acknowledge that turbines don’t spin without wind, although they say spreading turbines across large farms means some almost always generate power at a given time. They choose sites where winds are consistent 60 to 80 meters in the air.

Consistency, the industry says, comes in the price. Many wind farm operators sign 20- or 30-year fixed-price contracts with power companies before building. Average contracts for fuels such as coal have dropped to two or three years because of uncertainty over prices, regulations and other market issues.

“It’s a very powerful hedging benefit for (utilities), locking in a price for 20 years or more,” Salerno said.

That happens more often west of Pennsylvania, though. The Midwest offers open space with lots of wind to harness.

“The Plains are attractive,” Reed said, noting the biggest wind projects are slated for Midwestern and Western states. “They’re expanding transmission and modernizing the grid so we can bring it in.”

Coal and nuclear power dominate electrical production and consumption in Pennsylvania. New sources needed to replace retiring coal plants and expected shortfalls on the PJM grid are most likely to harness the gas coming from shale.

“We’re seeing all this activity in natural gas. That will take over the lion’s share of energy generation,” Reed said.

Beyond the West, producers are eyeing offshore locations for sources of steady winds away from the population. Reed is part of a team using a Department of Energy grant to study how and where that could happen off the East Coast. Corbett is part of the Great Lakes Offshore Wind Energy Consortium, where governors are looking at developing uniform rules and standards for offshore turbines.

“If that gains traction, what are challenges in the basin? Can we align the permitting requirements and align the interconnectivity?” Henderson said.